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India's outsourcers look east with eyes on Asian tigers

China, Japan and South Korea could be next for Nasscom

Great Wall of China

Indian IT services group Nasscom is turning its attention eastwards with a focus on China, Japan and other previously untapped markets in an attempt to maintain the industry’s double-digit growth.

The country’s outsourcers have historically focused their efforts on customers in the UK and US, but president R Chandrasekhar said at the ITsAP SME conference this week that this would change, according to the Economic Times.

"These are areas, we are actively trying to refine our strategy and are working with the companies on refining that strategy," he said, referring to markets including China, Japan and South Korea.

"At this point, I will not be able to say this is our strategy for this particular country. But, it is quite clear that the same strategy which was used in US and UK, may not be applicable in Europe. The same strategy which is used in Europe may not be applicable in Japan,"

China especially is thought to be something of an untapped goldmine for India’s IT services giants. Although firms like Infosys and Tata have had operations there for a number of years, they’ve not performed particularly well.

Nasscom’s deputy director of global trade development, Gagan Sabharwal, told Livemint that the body’s initial focus in China would be on the government sector.

However, as in the US, visas for workers remain a stumbling block.

“The problems that most top executives, even CEOs, of Indian IT firms face when they travel to China is that these visas are issued for very short durations and they are not multiple-entry visas,” he said.

“What we’re asking for is to issue business visas that will be valid for 2-3 years at least.”

China’s IT spend is set to grow by eight per cent a year to $172.4 billion (£104bn) by 2016, according to Gartner.

Nasscom, meanwhile, is predicting India’s outsourcing industry will expand 13-15 per cent next year, an improvement on the 12-14 per cent projected for 2014.

It remains to be seen how successful the Indian IT body will be with its Asian pivot plans.

A recent report by Forrester, for example, pointed out that China's homegrown outsourcing market is itself maturing to the point where firms like Gamutsoft and Pactera are now aggressively targeting multinationals. ®

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